President Trump gave his first address to a joint session of Congress last night.
The one thing I can say with great confidence, based on applause patterns, is that it didn’t generate the same spirit of bipartisan good will as the Pope’s address back in 2015.
But let’s set aside the Republican-vs-Democrat silliness and focus on public policy.
What was good in Trump’s speech? Overall, there were nine things that seemed positive.
These are the three things that got my blood pumping.
- Lower corporate tax rate – Trump didn’t specifically reference the 15-percent rate he mentioned in the campaign, but he aggressively argued for a big drop in America’s punitive corporate tax rate.
- Obamacare repeal – The president effectively outlined how Obamacare is a disaster for taxpayers, for consumers, for the economy, and for the healthcare system.
- Food and Drug Administration – Trump correctly criticized the bureaucrats at the FDA for stifling medical progress. I think it’s safe to assume that bureaucracy will be better behaved for the next four years. Maybe we’ll even get rid of the milk police.
What was hopeful about Trump’s speech?
Quite a bit, actually. Here are six things that caught my attention where it’s possible that we’ll see progress.
- Jobs – President Trump correctly diagnosed the problem of dismal labor force participation. It remains to be seen whether the net effect of his policies is more job creation.
- Washington corruption – I like that he focused on trying to clean up Washington, but I don’t think a handful of restrictions that make it hard for Administration officials to become lobbyists will make a difference. You need to shrink government to “drain the swamp.”
- Obamacare replacement – While the repeal message was strong, the replace message was fuzzy. It seems Trump wants more of everything, but at lower cost. That’s what a free market can deliver, but I worry that’s not quite what he has in mind. In the back of my mind, I’m worried that I was right five years ago when I predicted that Obamacare would decimate the Democrats politically but nonetheless be a long-fun victory for statism.
- Medicaid reform – We didn’t get the necessary specifics, but the President definitely used rhetoric that suggests he is not going to be an obstacle to at least this slice of entitlement reform. I feel good about the soft prediction I made two months ago.
- School choice – Trump’s comments on education were very uplifting. At the very least, the White House will use the bully pulpit to promote choices for parents rather than throwing more money into a failed system. It would be great if there was some follow-up, ideally leading to the abolition of the Department of Education.
- High-skilled immigration – I was surprised that the President said nice things about skilled immigration. Maybe this is a positive sign for the EB-5 program and other job-creating initiatives that are designed to attract successful investors and entrepreneurs to the United States.
And here’s what was negative about Trump’s remarks.
We’ll start with the five things that left me feeling somewhat pessimistic that we’ll have bigger government when the dust settles.
- Transportation infrastructure – The President wants a lot of money spent on infrastructure. Fortunately, he was careful not to say that the federal government will be the sole source of the new spending. But I worry that we’ll get a bigger and more wasteful Department of Transportation at the end of the process.
- Border-adjustable taxation – It’s troubling that Trump recycled the myth that foreign nations discriminate against American products when they impose value-added taxes on their citizens. It may be an indication that he will sign on to the misguided “border-adjustable tax” in an otherwise pro-growth House tax plan.
- Veterans – Trump said he wants to take care of veterans. That’s a good idea, and the ideal solution is to abolish the Veterans Administration. I’m worried, though, Trump will simply throw good money after bad by padding the budget of a bloated and incompetent bureaucracy that rewarded itself with bonuses after putting veterans on secret waiting lists.
- Immigration – Notwithstanding the positive comments about skilled immigrants, his overall tone was very anti-immigration. Given that so many immigrant groups from all over the world prosper enormously in the United States (and thus generate benefits for the rest of us), it would have been better if he has a more welcoming attitude while focusing instead on restricting access to the welfare state.
- Pentagon blank check – President Trump gave a mixed message. He criticized the heavy cost of needless overseas interventionism, yet then urged more money for a bureaucracy-heavy Pentagon. Yet why spend even more money if there aren’t going to be any more nation building exercises?
What was really disappointing about Trump’s speech? Here’s my list of three things that were unambiguously depressing.
- Protectionism – The president seems determined to harm American consumers and undermine America’s economy. Let’s hope these policies don’t lead to a global trade war like in the 1930s.
- Childcare Entitlement – Federal subsidies have resulted in higher costs and inefficiency in health care and higher education. Trump now wants to cause the same problems in childcare. This won’t end well.
- Paid Parental Leave – When even columnists for the New York Times confess that this type of policy backfires on women by making them less attractive to employers, it’s bizarre that it would be endorsed by a Republican president.
So what’s the bottom line?
To be blunt, beats the heck out of me.
I wondered back during the campaign whether Trump is a big-government Republican 
or a small-government conservative. I contemplated the same question when he got elected. And also when he got inaugurated.
Last night’s speech left me still wondering, though it’s safe to say Trump does not share Reagan’s instinctive understanding that government is the problem rather than solution.
That doesn’t necessarily mean we’ll get bad policy over the next four years. But there’s no guarantee we’ll get good policy, either.
I support a defense second to none… that said… I might point out that we currently spend spend 581B on defense… the Chinese spend 155.6B… the Russians… 46.6B… North Korea 7.5B and Iran 6.3B… if our soldiers have to scrounge for spare parts to keep equipment combat ready we have a Pentagon that’s rife with mismanagement and incompetence… those conditions need to be addressed before we sink more money into that particular swamp…
budget figures from: http://www.globalfirepower.com/defense-spending-budget.asp
Our current immigration system is insane. Anything would be an improvement. Family based immigration is a bad joke.
My general assessment is the same as Dr. Mitchell’s. Certainly a better mix than we would have gotten under Hillary-Democratic flattening-of-effort/reward-curves-on-all-fronts Europeanization policy. But still, a long way from the supply side economics that will make us once again a top racing horse on prosperity growth, in other words what would “make America great again”.
Folks! Our structural growth rate is now a semi-permanent HALF of the world average growth rate. We cannot linger at these levels for long and expect our children to still be at the top of the worldwide prosperity scale past midcentury. The arithmetic of compounding growth deficits is deterministic. It makes no exceptions whether you’re christian, buddhist, gay, vegetarian etc. . Cultures that cannot match the world’s average growth rate WILL decline. What cannot go on, WILL NOT go on.
Trump’s protectionism with the border consumption tax — especially if it morphs into a VAT! — will be enough to undo all his other positive proposals.
Generally without a true reduction in the size of government (percent of GDP consumed and controlled by government) there is little hope for sustainable increased growth. We would be simply reshuffling the deck waiting for the next Democratic administration to take us down the next irreversible step towards Europeanization — and one percent growth trendline to deterministic decline.
The only silver lining is that protectionism seems to be a reversible mistake — assuming we don’t end up with a value added tax. We had more protectionism in the world and got rid of it. Not so with entitlement program mistakes. Those are truly one way valves. Once a population gets used to entitlements they will latch on to them and ride them all the way to the bottom.
As far as withdrawal from international conflicts, that is a positive thing if you’re a libertarian. But I’m afraid that this is not a choice but rather an inevitability. You simply cannot remain the world’s policeman when your growth rate does not at least match average world growth rates, and thus your economy represents an ever smaller percentage of total world domestic product. After all, military might derives from economic might, not the other way around. Some military may be necessary, but remember that armaments are a net consumer of wealth. Wealth that can only keep up with worldwide averages if it is generated by the private sector.
One detail: the family leave entitlement will likely apply to men as well as women — making this sure that everybody becomes less competitive against our foreign competitors, not just women.
On a more general note, I liked Trump’s comment about wanting to be president of the US, not the world. I’m sure that means different things to different people. I want to believe that it means that perhaps finally — perhaps — we will not all become some average world citizen, made from the same mold, ruled by a world elite that resembles the French government.
I have always thought that, fortunately for humanity, no, we cannot “all get along”, we will not all accept being molded into a harmonized and homogenized prototype French citizen. And I always thought that the frustrated withdrawal of a major country from one or more international organizations, e.g. the OECD, the UN, the climate treaties, etc. would signify that humanity had indeed turned the page. I’m not sure, but I want to believe that Brexit and the Trump election and his talk about withdrawing from international harmonization and homogenization treaties are just the beginning of that trend. There is still a very long way to go. But if this is what is happening, then I admit that even I did not anticipate it would happen so soon. I’d like to see more concrete actions on this front. For a while it seemed Trump would take an official position on distancing America from the Paris Climate treaty. Somehow that seems to have gotten squelched, and that is not a positive sign.
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